When a union successfully raises the wages of its members, it will also
A) increase total productivity, which will generally increase in proportion to the wage rate.
B) encourage employers to purchase more of the union labor.
C) increase the share of income allocated to labor as opposed to capital.
D) increase the employer's incentive to find substitutes for union labor.

Question

Quizplus · Accepted Answer

When wages increase, employers may seek to reduce costs by finding alternatives to expensive union labor, such as automation or outsourcing, thus increasing the incentive to find substitutes.

When a Union Successfully Raises the Wages of Its Members